Investing.com - Gold
prices posted hefty gains on Friday on reports that physical demand is picking
up, while uncertainty over the fate of monetary stimulus programs in the U.S.
bolstered the precious metal's safe haven appeal.

On the Comex division of the New York Mercantile
Exchange, gold futures for December delivery traded at USD1,378.40 during U.S.
afternoon hours, up 1.29%.

Gold prices hit a session low of USD1,357.10 a
troy ounce and high of USD1,379.10 a troy ounce.

The December contract settled up 2.06% at
USD1,360.90 a troy ounce on Thursday.

Gold futures were likely to find support at
USD1,315.40 a troy ounce, Wednesday's low, and resistance at USD1,391.35, the
high from June 17.

Reports that physical demand for gold is on the
rise in Asia bolstered prices on Friday amid technical buying.

Elsewhere a mixed bag of U.S. economic
indicators began to fuel sentiments that the U.S. economy is recovery but at a
sluggish clip, and an eventual Federal Reserve decision to begin tapering
monetary stimulus measures will take place so gradually that gold will still
enjoy monetary support for the long term.

Monetary stimulus programs such as the Fed's
USD85 billion in monthly asset purchases tend to weaken the dollar by driving
down long-term interest rates, which makes gold an attractive venue as long as
such tools remain in place even if at a lesser amount.

Gold and the dollar tend to trade inversely from
one another.

The Commerce Department reported earlier that
U.S. building permits rose 2.7% to 943,000 units in July, just shy of
expectations for a 2.9% increase to 945,000 units although June's figure was
revised up to 918,000 units from 911,000.

The government added that housing starts rose
5.9% to 896,000 units in July, missing expectations for a 8.3% increase to
900,000 units. Still, June's figure was revised up to 846,000 units from
836,000.

Elsewhere, the Thomson Reuters/University of
Michigan's preliminary consumer sentiment index fell to 80.0 in August from
85.1 in July. Analysts were expecting the index to rise to 85.5 this month.

Not all U.S. data missed expectations.

The Bureau of Labor Statistics said in a
preliminary report that nonfarm productivity rose 0.9% in the second quarter,
beating expectations for a 0.6% gain after a 1.7% decline in the previous
quarter.

Also on the Comex, silver for September delivery
was up 1.57% at USD23.295 a troy ounce, while copper for September delivery was
up 0.82% and trading at USD3.365 a pound.